30.07.2014

Fiscal reserve as of 30.06.2014 is BGN 6.6 billion, including BGN 5.9 billion deposits in BNB and banks and BGN 0.7 billion receivables under the EU Funds for certified expenditure, advance payments, etc. In accordance with §1, point 41 of the Additional Provisions of the Public Finance Law, the fiscal reserve scope has been changed to include the receivables under the EU Funds for certified expenditure, advance payments, etc.

Consolidated revenues and grants under CFP as of the first half of 2014 stand at BGN 14,170.1 million, or 45.7 % of the annual plans for 2014 under the State Budget Law. Compared to the same period of the previous year CFP revenues remain close in nominal terms (they rise by BGN 4.3 million). This is mostly due the baseline effect of one-off revenue in the first half of 2013 in the part of non-tax revenues (dividend proceeds from enterprises with state participation and an amount of BGN 303 million awarded to the state under an arbitration award), as well as an effect from the amended statutory deadlines for dividend payments from state-owned enterprises.

At end-June 2014 tax proceeds, including revenues from social security contributions, total BGN 11,179.6 million, which is 46.0% of the 2014 plans. Compared to the same period of the previous year tax revenues rise by BGN 294.3 million, or 2.7 percent, in nominal terms.

Revenues from direct taxes amount to BGN 2,249.1 million, or 52.1% of the plans for the year, which is an increase by 11.2% against the first half of 2013. This increase in proceeds for the first half of 2014 compared to same period of the previous year is mostly seen for PIT - BGN 192.4 million, which is 17.4% more compared to the same period of last year. Corporate tax proceeds also register an increase by 3.8% (BGN 34.5 million).

Revenues from indirect taxes amount to BGN 3,465.2 million, or 42.1% of the annual plans, including VAT of BGN 2,254.2 million, or 42.1%; excise duty revenues of BGN 1,158.1 million, or 41.9%; customs duty revenues of BGN 70.1 million, or 51.5 per cent. Proceeds in this group decrease by BGN 91.7 million in nominal terms compared to the same period of the previous year as a result of the larger amounts of VAT and excise duties refunded in the first half of 2014 compared to the same period of 2013, and also of the consumption and imports dynamics. For the period January-June 2013 the VAT refunded amounts to BGN 2,760.7 while for the same period of 2014 it is BGN 2,831.3 or by BGN 70.6 million more. The amount of the non-refunded VAT decreases by BGN 190.0 million, i.e. from BGN 320.0 million as of June 2013 to BGN 130.0 million as of June 2014. The strict adherence to the statutory deadlines for VAT and excise duties refunds continues this year and is aimed at establishing the state as an upright payer and partner of the businesses and at creating normal conditions for growth and development. The basic effect of received in February 2013 arrears to the amount of BGN 65 million should also be taken into account; they had a one-off effect for 2013, so that makes VAT revenues for the two periods incomparable. An impact on the VAT proceeds from imports also have the planned repairs of the manufacturing facilities of a large economic operator which postpones part of the supplies of raw materials for production and respectively VAT payment due on imports for future periods. The underperformance of VAT revenues due to the planned rehabilitation of units in the first months of the year, which is estimated at around BGN 90 million, is expected to be gradually offset in the following months.

Proceeds from other taxes, including property taxes and other taxes under the Corporate Income Tax Law, amount to BGN 491.1 million, or 54.7% of the plans for 2014.

Revenues from social security and health insurance contributions are BGN 3,037.3 million, or 48.4% of those planned for the year. Compared to the same period of the previous year the revenues from social security contributions have risen by BGN 131.6 million, or 4.5%, in nominal terms.

Non-tax revenues and grants mount to BGN 2,990.5 million, or 44.6 % of those planned for the year. The amended statutory deadlines for dividend payments from state-owned enterprises, on the one hand, and the one-off revenues, on the other, make non-tax revenue data for the two years under consideration incomparable. Non-tax revenues amount to BGN 824.1 million as of 30.06.2014 against BGN 2,192.0 million as of 30.06.2013. The lagging behind of grant proceeds compared to the same period of last year, as reported as of end-May, is already compensated in June when they register a growth of BGN 77.9 million, or 7.2%, compared to the first half of 2013.

The expenditures under the Consolidated Fiscal Programme, including the contribution of the Republic of Bulgaria to the EU budget, as of 30.06.2014 amount to BGN 15,165.7 million, which is 46.7% of the annual plans. Compared to June 2013 expenditures under the CFP have risen by BGN 993.7 million, or 7.0%, mainly due to the accelerated absorption under European programmes and funds, and to social expenditure growth. It is important to note that expenditures under the EU funds accounts (including national co-financing) have risen considerably by BGN 612.5 million, or 48.4%, compared to the same period of 2013, which is linked to the better EU funds absorption, while national budget expenditures have only risen by 3.0% (BGN 381.2 million) compared to those reported for the same period of 2013. EU funds expenditures (including national co-financing) amount to BGN 1,877.7 million as of the end of June 2014, the reported for the same period of 2013 being BGN 1,265.2 million. In structural terms, maintenance and interest payments are lower compared to the same period of last year, while capital expenditures, subsidies for non-financial enterprises and social and health insurance payments have risen. The growth in social expenditures is mainly due to the basic effect of the increase of pensions as from 1 April 2013 and to higher health insurance payments in the first months of 2014 linked to payment of last year liabilities, etc. On the other hand, capital expenditure growth (including net increment of state reserve) is again linked with the higher payments under EU programmes and funds. As of end-June 2014 they amount to BGN 1,737.7 million, or by BGN 400.9 (30.0%) more compared to the same period of the previous year when they amounted to BGN 1,336.8 million.

Non-interest expenditures amount to BGN 14,364.0 million or 48.2% of the annual plans. Non-interest current expenditures as of the first half of 2014 amount to BGN 12,626.3 million,  or 50.9% of the plans, capital expenditures (including net increment of state reserve) amount to BGN 1,737.7 million, or 34.8% of the plans for 2014. Interest payments amount to BGN 240.1 million, or 35.8% of the plans for 2014.

The part of Bulgaria's contribution to the EU budget, as paid as of 30.06.2014 from the central budget, amounts to BGN 561.7 million, which complies with Council Regulation (EC, EURATOM) 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources.

The budget balance on a cash basis under the Consolidated Fiscal Programme (CFP) as of June 2014 is negative, amounting to BGN 995.6 million and is formed by a deficit under the national budget of BGN 556.0 million and a deficit under EU funds of BGN 439.5 million. The deficit is formed mainly by the higher expenditure under European programmes and funds, and by higher social expenditure, including due to the basic effect of the increase of pensions as from 1 April 2013. The deficit is influenced by the suspended payments from OP Environment and under two axes of OP Regional Development where certified expenditures of BGN 478.3 million are expected to be reimbursed after the payments to Bulgaria are resumed.

Data on the Consolidated Fiscal Programme implementation as of 30 June 2014 are published on the website of the Ministry of Finance, in the Topical Publications/Statistics category.